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UPDATE 1-Oracle warns Q3 results to lag forecasts
(Adds details, background, comments, afterhours stock price)
REDWOOD SHORES, Calif., March 1 (Reuters) - Oracle Corp. (NASDAQ:ORCL) joined virtually the rest of the high-technology world on Thursday as the world's second-biggest software company warned that quarterly results will lag expectations due to waning spending by customers on information technology.
"A substantial number of our customers decided to delay their (information technology) spending based on the economic slowdown in the United States," said Oracle Chairman and Chief Executive Larry Ellison in a statement. "Sales growth for Oracle products in Europe and Asia Pacific remained strong. The problem is the U.S,. economy."
Based on the slowing sales, Oracle now expects to report earnings per share that rose 25 percent to 10 cents a share, from 8 cents, a year ago, excluding investment gains. Redwood Shores, Calif.-based Oracle had been expected to earn 10 cents a share, according to First Call/Thomson Financial.
Oracle stock dropped more than $4 in after-hours trading to $17-1/4 on Instinet from its Nasdaq close of $21-3/8, falling below its year-low of $18-13/16. Oracle issued the profit warning after the close of regular U.S. trading. The stock is well off its year-high of $46-7/16.
"It's just going bring down the whole software sector. Obviously, no one's immune. I think the whole group is vulnerable. This is the spill over of technology," Credit Suisse First Boston analyst Brent Thill said. "Software was the last standing soldier."
The software vendor said total revenue grew around 9 percent for the quarter and software license sales revenue grew by 6 percent. Of the company's two software product lines, Oracle said its applications business of enterprise and front office software grew 50 percent while its database business was flat to slightly negative.
"License growth was strong in the first two months of Q3, and our internal sales forecast looked good up until the last few days of the quarter," Ellison said.
"With continued uncertainty in the economy, we can't predict when sales growth will improve."
Earlier this week, two key Wall Street analyst firms said they were cutting their estimates on Oracle's 2001 revenues, citing the slowing U.S economy and weak technology spending.
Oracle said operating margin improved to 33 percent, an increase from 31 percent, a year ago, Oracle said. The company added that it will give more detailed fourth-quarter financial guidance when it reports third-quarter earnings on March 15. |
